If the product you purchased is a Giffen product, your answer to this question will most likely be yes. In fact, in this case we find ourselves unconsciously, What we can find when purchasing a product whose price has increased It means.

Agree As the prices of products increase, we tend to buy more What exactly explains the Giffen paradox?

To understand the Giffen Paradox, let’s first look at the concept of supply and demand.

Supply is the quantity of a product or service that a seller sells at a given price. Demand is the product or service that people are willing to buy from a seller at a certain price. When supply is demand When prices rise, demand decreases, and when prices fall, demand begins to increase.

The interaction between supply and demand influences the price of products in stores and determines the profit a company makes. This concept essentially explains why markets sell high quality cheese at a higher price than regular brand cheese.

In 1895, the British economist Alfred Marshall was the person who mathematically explained how supply and demand arise.

However, he states that interesting exceptions may arise after stating the general rules. marshal, Price increases can in some cases surprisingly increase demand. tells.

The person who first brought up this situation was the well-known economist of that period, the Scotsman Robert Giffen. This economist describes the problems that arose in Ireland in the mid-19th century. Potato famine increases potato prices sees.

This He sees that the demand for potatoes is increasing rather than decreasing. and begins to question this contradiction, which is not entirely consistent with logic. Because this situation discussed by Giffen contradicts the concept of supply and demand, his work is called the Giffen paradox.

Moreover, products whose demand increases as their prices increase are called Giffen goods.

Giffen goods mainly include basic needs. Therefore Even if prices rise, consumers will continue to buy. By this logic, the demand for Giffen goods increases as the price increases and decreases as the price decreases.

These are products that you generally consume more of when you have less money, but quickly replace them with better options as your income increases. Some Giffen goods; salt, rice, bread and potatoes.

For example, you may have had to consume a lot of pasta during your college years, but after you graduated and reached a better income level, you started eating pasta. It may no longer be a product you consume as often as before.

For another example of the Giffen paradox, we can look at meat.

As the price of meat products rose, most of us began to give up meat and spend the budget we had allocated for it on more affordable food products, resulting in The balance between supply and demand has changed.

Then there was a rise in the prices of basic food items, which left us with the Giffen paradox. While low-income families can cook with a few ingredients and spend the day with bread, With the increase in vegetable prices, this has become impossible.

After all, it is the staple food of many people, Bread was the cheapest. As a result, the price of bread began to rise as the demand for bread increased. What are your thoughts?

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